Evading the Catastrophic Costs of Nursing Home Care: A Theoretical Inquiry

Research output: Contribution to journalArticlepeer-review


While many countries operate publicly funded programs to help care-needing elderly people finance the catastrophic costs of nursing home care, eligibility to public assistance may be means tested. To qualify for a means-tested program, applicants must first exhaust (spend down) their financial assets on privately paying for nursing home care, thereby wiping out their lifetime savings and children’s inheritance. They may naturally consider the possibility of hiding assets from the health agency, consequently shifting the financial burden to taxpayers. The present article adjusts two classical tax evasion models to capture the decision to evade the costs of nursing home care, focusing on the implications on the evaded costs and the program’s deficit of attempting to cope with the escalating costs of nursing home care by imposing a cost-sharing premium on the applicants’ adult children. Some insights on the socially optimal level of the cost-sharing premium are finally discussed.

Original languageEnglish
Pages (from-to)662-678
Number of pages17
JournalPublic Finance Review
Issue number4
StatePublished - 1 Jul 2019


  • assets spend down
  • cost evasion
  • cost-sharing premium
  • nursing home care
  • nursing home cost

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics
  • Public Administration


Dive into the research topics of 'Evading the Catastrophic Costs of Nursing Home Care: A Theoretical Inquiry'. Together they form a unique fingerprint.

Cite this